The Uber model for trucking still may be poised to revolutionize freight mobility, but its growth may be moving at a slower pace than anticipated. And that could be because the trucking industry as a whole is still resistant to it.
However, Wallace Lau, industry principal at Frost & Sullivan, noted that market competition has grown with more and more new mobile-based freight apps spreading across the industry. And just last month, Uber threw its own wrench into the market with the launch of its Uber Freight app that matches trucking companies with available loads.
Last year, Lau wrote the “Uber for Trucks: Executive Analysis of North American Mobile Based Freight Brokering Market” study released by Frost & Sullivan. At the time, the mobile-based freight brokerage market generated approximately $100 million in revenues. In his study, Lau projected that by 2025, the mobile freight market is expected to grow at a compound annual growth rate of 74.65% and generate $26.40 billion in revenue for the entire market.
Now, Lau told Fleet Owner, it looks like those numbers are moving a bit slower than expected and he is currently in the process of updating his study and redefining market definitions. He expects those updates will be released sometime this fall.
From the firm’s initial outlook, Lau said Uber’s Freight model is pretty similar to what the industry has seen with other freight brokers in the market today. But the biggest thing with Uber, he added, is more about the cachet the name carries.
“A lot of what the biggest challenge for this market has been is that a lot of people in the trucking industry still don’t know what this digital freight broker technology actually can do for them,” Lau explained. “These new companies coming in have had a very difficult time trying to get their name out there and getting their footprint established in this market. So with Uber’s name coming in, I think it really helps open up the market and open up the eyes of the trucking industry to this emerging trend that will affect them in the near future.”
Lau added that even today, he thinks there is still a resistance to this new technology and this platform because carriers are used to their daily routines and working with traditional freight brokers.
“At this moment there’s still a pretty big resistance to it,” he noted. “This entire industry is very traditional in terms of how it wants to move things.”
According to Bill Driegert, director of Uber Freight, the concept of Uber Freight started to crystalize in 2012 to match smaller carriers and owner-operators with available loads.
“On the carrier side, they are racing to fill capacity,” Driegert told Fleet Owner. “They spend time on the phone and trying to negotiate rates. The [traditional broker process] is typically 4 to 5 hours of labor. It’s not a very efficient model. We thought, ‘technology has to be able to solve this model more efficiently and effectively.’”
“Ultimately what we built is a super-efficient fleet application that drivers can download and get immediate access to freight with one click,” he added. “Drivers can log into the app, find a shipment that meets their needs, hit a button, and book it. There’s no one else in the market that has one-click booking.”
Last fall, Uber Freight began a pilot in Texas to study how truck drivers used the app. Driegert said it became an opportunity for him to assess the driver and carrier market and take into account the different reasons a driver or carrier would want to engage in the app.
“We found owner-operators wanted to move freight in a day run and be home at night with their families,” he noted. “Over-the-road drivers want to get lots of miles and fill capacity, and we want to be able to serve them as well.”
“Drivers want transparency, great prices and they want to get paid right away,” Driegert added. “It sounds like a simple thing, but once I hit that button, it’s like buying a book online. I know and have a guarantee that it’s coming, and that guarantee builds trust. We provide that guarantee and we also pay faster. We pay less than a week. All carriers sign up for payments and we trigger payment on delivery. That’s one of the benefits of being able to plug into a lot of Uber’s back-end infrastructure.”
Recently, and only seven months after the autonomous beer truck delivery in Colorado, Uber confirmed it fired Otto founder Anthony Levandowski and dropped the company name in an effort to untangled itself from mounting legal troubles. Levandowski, a former executive with Google’s driverless division, launched Otto in January 2016 and sold it months later to Uber. He became head of Uber’s autonomous division, which in October celebrated the 120-mile autonomous delivery in Colorado. However, Waymo, a spin-off from Google, filed suit, claiming that Levandowski stole confidential files and trade secrets.
Levandowski has reportedly resisted cooperating in the court case, leading to his recent termination. The firing came days after Uber gave up a claim to the Otto name, which was challenged in court by Clearpath Robotics, which already had a division called OTTO Motors.
When it comes to autonomous trucking and Uber Freight, Driegert said the company thinks that overlapping the two is a possibility down the road, but right now it’s focused on building up Uber Freight.
“Historically this has been a market that has been slow to adopt new technology,” he said. “Today, we still use faxes and lots of phone calls. It’s clear that there is a need for the market to get more efficient and push forward. What we’re building will be a part of that.”
Lau noted that he believes carriers should at least try some of these freight-matching platforms for because of the benefits they offer:
- Instantly find loads
- Provide a better fixed freight rate
- Earn more money
- Fleet management services that help automate routing and documents
When it comes to potential problems that could arise like with Uber’s ride-sharing service, Lau said he doesn’t think the trucking industry can be directly compared to that.
“That’s just point A to point B,” he explained. “In the trucking industry, I think there’s more understanding for delays. The one thing that this app does is it applies transparency to the shipper and receiver as well. People could start preparing when the situation arises. I think that’s where the application can help when mitigating these complaints because there’s so much transparency built into it.”
